A recent study from Farleigh Dickinson University reveals that 29% of Americans believe an armed revolution may be necessary in the next few years to “protect liberties.”

18% of Democratic respondents shared this view, 27% of Independents and 44% of Republicans.

The study, which interviewed registered voters (only 71% of eligible adults are registered) differs from those conducted by corporate pollsters in that it included a substantial proportion of low income cellphone-only households

Christopher Greene of AMTV discusses the implications of this groundbreaking study:

photo credit: Express Monorail via photopin cc

Crossposted at Daily Censored

According to the BBC, 68% of Swiss voters have backed a “fat cat” referendum to impose strict controls on CEO pay. The new law gives shareholders a veto on CEO compensation and bans “golden handshakes,” i.e. big payouts for new and departing managers.

DW reports the Swiss initiative is leading German political leaders to consider similar legislation. Surprisingly, support for a law allowing German shareholders to control CEO pay has broad support across the political spectrum. It enjoys equal support from the pro-business Liberal Free Democrats (FDP), Angela Merkel’s Christian Democratic Union, the opposition Social Democratic Party and even the Greens.

Given that eleven EU countries have also enacted a financial transaction tax on banks, it appears that Europe, at least, is going through the motions of trying to save the global capitalist economic system.

The US political elites, in contrast, seem to be making all the right moves to collapse the US economy and create anarchy in the streets.

The million (trillion?) dollar question is whether Europe, with the support of Russia, China and the other emerging economies, can save the global economic system (and civilization and the human species) on their own – despite the obstinate wrong headedness of the world’s largest economy.

I assume bookmakers are already taking bets on the exact month the US economy will collapse. Swiss fund manager Marc Faber is offerings 100% odds it will happen before the end of 2013.

Cross posted at Daily Censored

photo credit: keepps via photopin cc

Sacred Economics: Money, Gift & Society in the Age of Transition

Charles Eisenstein

2011,  Evolver Editions

(This review is divided into two sections. The first covers Part I: The Economics of Separation, describing the history of money and capitalist economics. The second half covers some intriguing fixes Eisenstein proposes for our broken economic system in Part II: The Economics of Reunion and Part III: Living the New Economy.)

Book Review – Part I

The title Sacred Economics makes Eisenstein’s book sound like a New Age treatise on spirituality. The book is actually about the end of capitalism. It offers an extremely well-researched discussion of the history of money, capitalist economics and the world wide movement for economic re-localization. The main focus of Part I is an exploration of the profound effect money has on human thinking and psychology. Eisenstein is most concerned about the illusion of separateness and of scarcity. Both, he argues, are mistaken beliefs that can be traced back to the privatization of communally owned land, an early consequence of the introduction of money.

Owing to his determination to avoid simplistic clichés about greedy corporate CEOs and amoral banksters, Eisenstein arrives at some startling conclusions. By tracing the western conception of money back to its earliest origins in ancient Greece, he makes a strong case that the money system itself is responsible for rapacious growth and resource depletion, greed and the demise of community.

How Money Destroyed the Gift Economy

The book begins by describing the gift economy that has characterized all primitive cultures. Public gift giving was a major social ritual in all early societies. It was the primary mechanism early human communities employed to satisfy basic survival needs. As civilizations became more complex, gift exchange and barter were impractical over long distances. Thus money was introduced as a common medium of exchange. Because money also represented stored value, it also had a profound effect on our perception of ourselves, other human beings and society.

The Illusion of Scarcity

An early artifact of the introduction of money was the mistaken belief that the basic necessities of life are in short supply. This illusion underpins all western economic theory. In fact many textbooks define economics as the study of human behavior under conditions of scarcity. As Eisentein points out, this is a ludicrous notion in a world in which vast quantities of food, energy and raw materials go to waste He links the illusion of scarcity to the illusion of the “discrete and separate self.” This, in turn, stems from the concept of personal wealth and the privatization of communally owned land. Prior to Roman times, land, like air and water, was considered part of the commons and couldn’t be owned. Under Roman tradition, there was no way for an “individual” (a Greek invention related to the concept of money and personal wealth) to legitimately take possession of common lands. Thus the Roman aristocracy must have seized it by force, just as the English stole the communally owned lands of Native Americans.

During the many centuries our ancestors had access to communal lands for their herds and crops, they enjoyed a sense of interconnectedness and interdependency. This was lost when the wealthy began fencing it off as private property. Many sociologists believe this loss of interconnectedness has left all of us with a fundamental inner emptiness we experience as never having enough.

The Origin of Greed

Eisenstein attributes greed to this illusion of scarcity. He can see no other explanation for the extreme generosity of poor people (according to numerous studies), in contrast to the wealthy. Low income people give away far more money, relative to income, than their rich contemporaries. Studies also show that rich people worry much more about money than anyone else. This, in turn, makes them even more inclined to perceive scarcity when none exists. Einstein talks about the immense anxiety people in rich countries experience over “financial security.” No matter how much they accumulate, it’s never enough.

Debt, Usury and Perpetual Growth

Sacred Economics argues that what economists commonly refer to as growth is the expansion of scarcity into areas of life once characterized by abundance. Fresh water, which was once abundant, has become scarce following its transformation into a commodity we have to pay for.

The fractional reserve banking system, which allows bankers to create money out of thin air – as debt – accentuates the pressure to convert more and more of the commons into commodities. Because the debt and interest created is always greater than the money supply (current global debt is estimated at $75 trillion, in contrast to global wealth of $30 trillion), there is always constant pressure to create more goods and services to repay it. This explains why there are always people willing to cut down the last forest and catch the last fish.

Extreme wealth inequality occurs because economic growth is always lower than the rate of interest. When debtors can’t make interest payments by producing new goods and services, they are forced to turn over more and more existing wealth to creditors.

As natural resources, such as fossil fuels, minerals, forests, fish and water, are rapidly converted to commodities, a similar transformation occurs in the social, cultural and spiritual commons. Stuff that was free throughout all human history – stories, songs, images, ideas, clever sayings – are copyrighted or trademarked to enable them to be bought and sold.

According to Einstein, the main reason for the world’s current financial crisis is that we continue to face mountains of increasing debt – yet have run out natural, cultural, social and spiritual capital we can convert to money to repay it.

To be continued, with a discussion of some of Eisenstein’s novel solutions.

Welcome to Your Bank of America

(from http://www.yourbofa.com/)

Dear Fellow American,

Welcome to your Bank of America.

Today, it’s time to acknowledge that our Bank isn’t working anymore—not just for the market, but for people, our real customers. We’ve paid $8.58 billion in relief to borrowers and $3.24 billion in fines. We face lawsuits and claims from citizens, companies, and state and local governments. There is even a petition with the Federal Reserve to break up our bank, adding yet more uncertainty to our position. Finally, we’ve found ourselves front-and-center in the national foreclosure crisis, and deep in unpopular investments like coal, at a time when climate change is a growing societal concern.

As a result, our company’s shares have fallen precipitously, and now trade at one-fifth their 2008 price. Our Bank may, in fact, soon need help keeping afloat—and much as in 2008, you, the American taxpayer, will be asked to provide that assistance.

The institutions you rescued in 2008 have continued much as they always were, engaging in the same practices that brought our economy so close to collapse. To make sure that this time around, things turn out differently, we at Bank of America are launching a forum in which you, the American taxpayer, can prepare for the time that you own us. By sharing ideas, and reading and rating the ideas of others, you can begin charting a course for this Bank—your course.

And when the day comes that you, the American taxpayer, own this Bank, you will be ready to make it a Bank for America—one that brings benefits not to the privileged only, but to all of our customers, and to all of our stakeholders too.

Welcome to your Bank of America.

Brian T. Moynihan
Chief Executive Officer
President

Brought to you by the same naughty men who produced the film The Yes Men

Go to www.bofa.com to share your ideas how our new bank should be run.

END:CIV Resist or Die

2011, directed by Franklin Lopez

Free (Creative Commons) download at: http://topdocumentaryfilms.com/end-civ-resist-or-die/

Film Review

END:CIV, according to the promo, “examines our culture’s systemic addiction to violence and environmental exploitation.” The title is drawn from Pac Man, an arcade came that first came out in 1980. In one of the world’s first video games, the player guides Pac Man, a small faceless mouth, through a maze while he devours Pac Dots and tries to escape blob monsters. The first three minutes of END:CIV superimpose a Pac Man game over images of old growth clear cuts, belching smokestacks, factory hog farms, wild fires, hurricanes and the US military’s ruthless killing machine. The sequence ends as a gigantic “GAME OVER” flashes across the screen.

The film is based on the Endgame, the best selling two volume book Derrick Jensen published in 2006. In Endgame, Jensen argues that mankind urgently needs to bring down “civilization” before it destroys the planet. He bases his case on twenty basic premises he lists at the beginning of both volumes. The film END:CIV examines four of them.

Premise 1 – industrialized civilization has never been and will never be sustainable, mainly because it’s based on non-renewable resources.

The film, like Jensen’s book, traces the rise of cities, which by necessity steal resources from distant regions and eventually denude the entire landscape of those resources. After making the case that the corporate elite are mindlessly and voraciously consuming an ever increasing amount of energy, land, water and other resources, the filmmaker points out that we live on a finite planet. He then argues that corporations will most likely continue this greedy consumption until everything is used up – or until we stop them.

The imagery in this section consists of shot after shot of old growth clear cuts, through which 90% of the earth’s rainforests have been transforms into deserts. It features cameos by indigenous and environmental activists who argue that industrial civilization has created an elaborate infrastructure for a lifestyle that has no future. They also point out that no “clean green path” to sustainable living will ever support the extremely wasteful way of life we have become accustomed to.

Premise 2 – traditional communities don’t allow willingly allow the confiscation of their natural and mineral resources by capitalist owners. Accordingly, a major focus of industrialized civilization has been to destroy indigenous communities by force. A corollary of Premise 2 is that industrialized civilization would collapse rapidly without, if not for its reliance on widespread violence.

This section juxtaposes common media images of violence with consumption-related adverting and infotainment. For example one split screen shows the aerial bombardment of Baghdad together with jewelry specials from the shopping channel; another depicts Bangladeshi sweatshops alongside a series of tiny butts in skin tight jeans.

In an excerpt from a public forum, Jensen explains that much of violence is invisible and a matter of conditioning. He gives the example of the cop who will pull a gun and drag you to jail if you don’t pay your rent or satisfy your hunger by eating off grocery shelves. He then questions the belief we all grow up with that people have to pay for the right to exist on this planet.

The film goes on to criticize the main message put out by the nonprofit environmental movement we can remedy this pervasive violence and extensive resource theft and exploitation by making politically correct purchase choices. In the view of Jensen and other activists featured in the film, Greenpeace, Sierra Club, Forest Ethics and similar “eco-bureaucracies” have essentially sold out by making preservation of the industrial economy their highest priority and saving the planet secondary. As Jensen points out, future generations won’t care how much we recycled. All they will care about is whether we leave them a living planet.

This section is also highly critical of the dogmatic stance of much of the environmental movement towards nonviolent civil disobedience. Jensen does a great send up of the movie Star Wars. In his version, the rebels don’t destroy Darth Vader by blowing up the death star. Instead they promote eco-tours and Fair Trade products from endangered planets and send waves of compassion and loving kindness towards Darth Vader, as they lock themselves down on his ship. They also vote to condemn and exclude the renegades who propose to blow up the death star – for allowing themselves to be contaminated by Darth Vader’s culture of violence.

Premise 3 – the culture (of industrialized society) as a whole and most of its inhabitants are insane.

The section points out that, contrary to popular belief, no combination of fossil or alternative fuels will allow us to continue our current “happy motoring” society. It focuses on Alberta’s insane tar sands project, the most environmentally destructive enterprise in history. Tar sands production is responsible for the second highest rate of deforestation (second to the Amazon rain forest in the world), as well as massive waterway contamination. All this environmental devastation is occurring to develop a technology that has one of the worst rates of Energy Return on Investment (2:1).*

Premise 4 – from the beginning, the culture of civilization has been a culture of occupation.

The film ends with a brief overview of the resistance movement in Nazi-occupied Europe. In the final scene, Jensen poses the provocative and disarming question: “If your homeland was invaded by aliens who cut down the forests, poisoned the water and air and contaminated your food supply, at what point would you resist?”

* EROI refers to the amount of energy returned for each unit of energy required to extract or create the new energy. Even solar photovoltaic cells, which aren’t particularly efficient, have an EROI of 8:1. Saudi oil has an EROI of 10:1. US oil reserves prior to 1970 had an EROI of 23:1. As of 2000, US reserves had an EROI of 8:1 (source: Fleeing Vesuvius).

Leaders from 2008 World Economic Forum

This is the second of two posts on Global Risks 2012, a discussion document the global elite is considering this week at the World Economic Forum meets in Davos Switzerland.

How Global Risks 2012 Came to Be Written

The World Economic Forum’s Risk Response Network (RRN) was launched in 2004 to provide public and private sector leaders with “an independent, impartial platform to map, measure, monitor, manage and mitigate global risks.” This is the RRN’s seventh annual report. It’s based on surveys completed by 469 international experts in industry, government, academia and civil society about 50 potential global risks across five categories: Economic, Environmental, Geopolitical, Societal and Technological. Risks in each category are rated according to both the potential damage they could inflict and their likelihood of occurrence. In addition, a specific risk in each category is identified as “the center of gravity,” which feeds other risks, both within the specific category and across categories.

How 469 Experts Rated the 50 Risks

Economic:

• Most damaging: chronic fiscal imbalances (translation – debt) and severe income disparity.
• Most likely to occur: chronic fiscal imbalances and severe income disparity.

Environmental:

• Most damaging: rising greenhouse gas emissions and failure of climate change adaptation (acknowledging that climate change is already occurring).
• Most likely to occur: rising greenhouse gas emissions.

Geopolitical

• Most damaging: terrorism, followed by critical fragile states and pervasively entrenched corruption.
• Most likely to occur: critical fragile states and pervasively entrenched corruption.

Societal

• Most damaging: water supply crisis, followed by food shortage crisis.
• Most likely to occur: water supply crisis, followed by food shortage crisis.

Technological

• Most damaging: cyber attacks.
• Most likely to occur: cyber attacks

Is There a Split in the Ruling Elite?

It’s clear from the spelling (using “our” instead of “or” and “re” instead of “er” at the end of words) that the authors of Global Risks 2012 are either British or Canadian. I find it extremely hard to imagine a report emphasizing carbon emissions and income inequality coming out of the US. I also think find it significant that three of the four companies listed as report “cosponsors” are insurance companies (see * below). If Exxon had helped write this document, it would surely minimize the danger of increasing carbon emissions, if it mentioned them at all.

At times division develop in the ruling elite – between the banking/insurance and the energy/military sectors – over specific issues. Climate change seems to be one of them. Owing to deregulation, there is significant overlap between insurance companies, which derive most of their income from reinvesting premiums, and other financial institutions. AIG, for example, is supposedly an insurance company but had to be bailed out because they owned a substantial chunk of subprime mortgages.

It’s clearly in the interest of oil, natural gas and coal companies for consumers to continue to buy and burn up as much fossil fuel as possible. Insurance companies, on the other hand, serve their shareholders best by reducing carbon emissions. They already face growing claims losses due to a massive increase in weather-related catastrophes. In this context it makes sense for them to cosponsor a World Economic Forum document emphasizing the need for international agreement about reducing carbon emissions. It also helps explain why Wall Street investment banker (and New York mayor) Michael Bloomberg has given a $50 million donation to the Sierra Club’s Anti-Coal Campaign http://www.nytimes.com/2011/07/22/nyregion/bloomberg-donates-50-million-to-sierra-club-coal-campaign.html

* Marsh and McLennan, Swiss Reinsurance Company, University of Pennsylvania Wharton Center for Risk Management, and Zurich Financial Services

2010 Protest at World Economic Forum

The World Economic Forum Weighs In

A British acquaintance has sent me a link to one of the background documents to be used when world leaders gather for the World Economic Forum in Davos Switzerland January25-29. The document is called Global Risks 2012 (http://www3.weforum.org/docs/WEF_GlobalRisks_Report_2012.pdf)

The World Economic Forum is a Swiss non-profit corporation that brings together some 2,500 “top” global business and political leaders every January in a remote Swiss mountain resort. Along with the G-7, the World Bank, the World Trade Organization and the International Monetary Fund, the World Economic Forum has a strong pro-corporate agenda and is a regular target for antiglobalization protests. The antiglobalization movement is a loosely knit network of anti-corporate groups that started in Asia and Europe in the 1990s, in response to the international treaty that created the World Trade Organization (WTO). Its American counterpart was born in November 1999, when 50,000 people marched in the streets of Seattle and thousands committed civil disobedience to derail the WTO Third Ministerial meeting. Currently the WTO and so-called “Free Trade” treaties, such as NAFTA, receive scant coverage in the mainstream media. Nevertheless labor and environmental activists remain deeply concerned about the power these international treaties give corporations to overturn democratically enacted labor and environmental protections.

Since 2001, grassroots activists from all over the world have been holding a World Social Forum in a developing country (usually Brazil) at the same time as the World Economic Forum. The philosophy behind the World Social Forum is that ordinary people have an even greater need for international conferences than corporate elites. It’s only by coming together and organizing that they can resist efforts by global elites to strip them of the limited democratic and economic rights they still enjoy.

Emphasis on Global Social Unrest

When the Guardian article that accompanied the report (http://www.guardian.co.uk/business/2012/jan/11/world-economic-forum-meeting-davos) stated that Global Risks 2012 focuses mainly on economic turmoil and social unrest (as opposed to globalization and free trade), I was extremely keen to read it. Would it mention Occupy Wall Street? It sure does, right there on page 16 under “Case 1: Seeds of Dystopia”:

“Two dominant issues of concern emerged from the Arab Spring, the ‘Occupy’ movements worldwide and recent similar incidents of civil discontent: the growing frustration among citizens with the political and economic establishment, and the rapid public mobilization enabled by greater technological connectivity.”

The document is full of other surprises. Unlike the mainstream media, Global Risks 2012 is surprisingly sympathetic towards the Occupy movement. The authors are deeply concerned about “dystopia,” the opposite of utopia, which they define as “a place where life is full of hardship and devoid of hope.” They go on to talk about the danger of declining economic conditions in Western Europe, North America and Japan jeopardizing “social contracts” between states and their citizens. These they define as has historic understandings that workers will be guaranteed access to health care (by North America they must mean Canada – this has never been true in the US) and decent pensions in old age.

They express concern (implying that corporate CEOs should also be concerned) about the link between global recession and increasing rates of poverty, mental illness, substance abuse, suicide, divorce, domestic violence and the abandonment, neglect and abuse of children (page 18).

They talk about the large numbers of unemployed young people around the world being a “lost generation” (page 22). Even more surprisingly, they identify huge income disparity as being one of the most serious global risks. They caution that when “social mobility” (i.e. individual ability to advance socially and economically) is attainable, income disparity can spur people to work harder. When it’s clearly not, as in the current global recession, feelings of powerlessness, disconnectedness and disengagement can “take root.” (page 19).

They conclude the dystopia section with the following warning:

“The social unrest that occurred in 2011, from the United States to the Middle East, demonstrated how governments everywhere need to address the causes of discontent before it becomes a violent, destabilizing force.” (page 19).

Destructive Corporate Lobbying

Global Risks 2012 also talks about destructive corporate lobbying (my translation – they use more obscure, intellectually lofty language) in trying to enact environmental and health regulations: “By their very nature, the costs involved in implementing safeguards, such as quality standards and risk mitigation practices, may give some individuals, firms or organizations reasons to lobby to minimize them and look for ways around them.” (page 22)

They are equally critical of the “too big to fail” banks: “When losses can be passed on to others – as when banks are defined as “too big to fail” – excessive risk-taking is likely to occur.” (page 22).

They conclude with the argument (making the 2008 banking crisis a case in point) that dangerously lax regulations “in just one jurisdiction could trigger global catastrophe.” (page 22)

How Will CEOs Answer the Discussion Questions?

I have to admit my favorite part of Global Risks 2012 are the “Questions for Stakeholders,” inserted at the end at the end of each section to make sure the corporate elites and the politicians who accompany them to these meetings are paying attention. I would give anything to listen in to the answers JP Morgan CEO Jamie Dimon and Rex Tillerson, CEO of Exxon, give to some of these:

1. What steps can be taken to reduce income disparity? (they need to get Dimon to answer this one.)
2. How can appropriate regulations be developed so that firms will undertake effective safeguards?
3. How can business, government and civil society work together to improve resilience against unforeseen risks? (the report uses the word resilience, which they borrow from the sustainability movement, a lot).
4. How can fostering entrepreneurship prevent the seeds of dystopia from taking root? (this wouldn’t be my approach, but at least they admit urgent action is needed.

To be continued.

Community garden in New York City

Book Review-Part VI

Fleeing Vesuvius, New Zealand Edition

(2011, Feasta and Living Economies)

Fleeing Vesuvius finishes with an Epilogue (Part 7), in which different authors give practical suggestions about preparing for the eventual collapse of our present energy intensive economic system. The items reflect a wide range of perspectives and priorities. However there are a number of common themes:

Individual

1. Try to be less “busy,” even if you have to cut back your work hours. Give yourself time to focus on surviving in uncertain economic times. Surveys show one of the main reasons Americans give for non-involvement in political and community activity is being too “busy.”
2. Begin investing in land, fruit trees and non-perishable foodstuffs, rather than banks and stocks.
3. Get out of debt and reduce your consumption by practicing frugality.
4. Build a survival support network by shifting from cash transactions to bartering and (where available) to local currency transactions.
5. Avoid the bunker mentality that characterizes the Survivalist Movement. Once another major disaster like Katrina hits, the denial practiced by most of the population will evaporate. Even if you have a shotgun, defending the food and water you have hoarded against an anxious and destitute mob is a risky proposition. This is why it’s essential to network with neighbors and other community members in preparing for a weather-related, public health or other crisis that disrupts the distribution of food and basic services.
6. Replace virtual relationships with face-to-face ones (i.e. spend less time on the Internet). Build stronger connections with friends, family and neighbors. Join something.
7. Re-skill in preparation for a new era in which energy guzzling technology is no longer an option – for example, learning how to grow veggies; make clothes, simple repairs and homemade cleaning products; and cook meals from scratch (a biggie for many young people).

Community

1. Work with local government to develop food security and other strategies to help your city or town become economically independent and energy self sufficient.
2. Support site or land value taxes (LVT), similar to those enacted in Pittsburgh (see http://stuartbramhall.aegauthorblogs.com/2012/01/15/money-and-energy-scarcity/)

National

1. Organize and speak out against the refusal of elected officials to tell the truth.
2. Organize and speak out against the failure by national governments to enact a feasible and effective emergency preparedness plan (addressing food and water security in the case of major infrastructure collapse).
3. Organize and speak out against government policies that dig a deeper hole, by increasing dependence on dwindling and costly fossil fuels. Building more highways and coal fired power plants is just plain stupid.
4. Lobby against government subsidies for “greener” technology – people who walk to work shouldn’t have to pay more taxes to pay for biofuels for people who insist on driving.
5. Lobby for cap and share laws to reduce carbon emissions (see http://stuartbramhall.aegauthorblogs.com/2012/01/17/surviving-the-collapse-possible-strategies/)
6. Lobby for your national economy to become energy self sufficient.

International

Lobby for an international treaty that puts a price on carbon (i.e. that requires countries to pay for their carbon emissions) and allows a rapid rise in that price until countries and companies have no choice but to curb emissions and promote carbon sinks.

Transition Towns New Zealand

The final section in the New Zealand edition contains very brief essays by activist in New Zealand’s Transition movement in various parts of the country. Four of them are available on-line:

http://fleeingvesuvius.org/2011/11/25/preface-to-the-new-zealand-edition/

http://fleeingvesuvius.org/2011/12/09/how-i-survived-the-end-of-the-world-in-aotearoa/

http://fleeingvesuvius.org/2012/01/02/how-resilient-are-we-a-new-zealand-immigrants-perspective/

http://fleeingvesuvius.org/2012/01/11/will-new-zealand-be-the-first-developed-country-to-evolve-a-steady-state-economy/

North American Edition

The North American edition of Fleeing Vesuvius has a preface by Richard Heinberg, author of the End of Growth (see http://stuartbramhall.aegauthorblogs.com/2011/10/30/documenting-the-collapse-of-capitalism/) and fellow at the Post Carbon Institute. Heinberg seems to have the same reaction if did: (“What a goldmine!”). You can read Heinberg’s preface here: http://fleeingvesuvius.org/2011/04/17/preface-by-richard-heinberg-north-american-edition/

The US edition also has an appendix “Should the US try to avoid a financial meltdown?” – a dialogue between two of the economists who contributed essays (Richard Doutwaite and Tom Konrad): http://fleeingvesuvius.org/2011/04/17/should-the-united-states-try-to-avoid-a-financial-meltdown/

Book Review-Part III

Fleeing Vesuvius, New Zealand Edition

(2011, Feasta and Living Economies)

The second part of Fleeing Vesuvius is entitled “Innovation in business, money and finance.” It draws on the main theme of Part I, describing how the current economic crisis is a direct result of fossil fuel scarcity and spiking energy costs. The second section focuses on the link between energy availability and money.

The late Richard Douthwaite is the author of the first and (I feel) best essay in Part II, entitled “The supply of money in an energy scarce world.” He traces the history of money, with special emphasis on the de-linking of money, production and wealth which occurred starting in the 1970s. This disconnect results from the “financialization” of the economies of the so called “industrialized” north. He points out the irony of calling Europe and North America “industrialized,” when currently most manufacturing takes place in developing countries, to take advantage of sweatshop wages. At present so called “industrialized” countries earn most of their profits through banking and other financial services. They also carry most of the global debt burden. Douthwaite finds it even more ironic that they owe most of this debt to so-called “developing” countries.

Getting Rid of Debt-Based Money

Douthwaite goes on to offer specific alternatives to our current debt based money system (under our current system, the one and only way money is created is by going to the bank to take out a loan – it’s called fractional reserve banking. A debt-based monetary system can only function in the presence of indefinite economic growth (see (http://stuartbramhall.aegauthorblogs.com/2011/10/30/documenting-the-collapse-of-capitalism/). Moreover the end of cheap energy also means the end of continuous economic growth. He also explores a number of strategies to facilitate the transition to a new steady state economy (one that doesn’t grow).

Douthwaite proposes to create inflation to eliminate the massive external debt that is suffocating the economies of Europe, North America and Japan. However he wouldn’t hand the money over to bankers, as the Federal Reserve does when they engage in quantitative easing. Instead Douthwaite would have governments create new money that they would spend directly into the economy to fix decaying infrastructure and provide essential public services. This would ensure that the new money would circulate in the economy to stimulate buying and increase jobs – instead of paying astronomical bonuses to CEOs.

Creating Regional and Local Currencies

He also strongly supports the creation of regional and local currencies. This gives poor people access to money when the national currency is in short supply due to recession and deflation. People only have access to the official currency when their products and skills increase corporate profits. Regional and local currencies, on the other hand, provide access to money to anyone with skills and/or products other community members need or want. In addition to boosting support for local business, by requiring that local currencies be spent locally, a pricing scheduled is created that more accurately reflects the work invested and true value to the community. Food production is an excellent example. Small farmers can easily work 16 or more hours a day. Yet owing to competition from large scale factory farms, the “market” price they receive for their crops is rarely enough to support a family.

Douthwaite also explores the possibility of creating a currency based on future energy production, just as early national currencies were based on gold (which will have far less intrinsic value than energy).

Rethinking Financing, Corporate Structure and Property Taxes

Other essays in part II look at alternative methods (other than borrowing and incurring debt) of financing the new energy efficient businesses, farms, and homes. One model favored by several authors is a “limited liability equity partnership.” In an equity partnership, the landowner, builder, and future occupation finance a home or new business by assuming an equity interest in its construction. “Rethinking Business Structures” looks at new corporate structures that place social and environmental considerations ahead of external shareholders.

“Why Pittsburgh’s real estate never crashes” is an interesting essay on Pittsburgh’s land value tax (LVT). It shows how property taxes that differentially tax land at a higher rate than buildings discourage property speculation. It credits LVT for protecting Pittsburgh from the massive foreclosure crisis other US cities faced in 2008.  Dan Sullivan, the author of the essay, is the education director of Saving Communities, a Pittsburgh- based non-profit.

To be continued.

***

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Fleeing Vesuvius, New Zealand Edition

(2011, Feasta and Living Economies)

Book Review-Part II

Obviously getting by without fossil fuels (owing to impending shortages of oil, natural gas and coal) will be an incredibly rude shock for all of us. Our current telecommunication, transportation and retail infrastructure, as well as our current system of industrial agriculture, are based on the abundant availability of cheap fossil fuels. On the plus side, Fleeing Vesuvius is full of a number of specific strategies, currently being tried in Ireland and elsewhere, for building resilient communities to withstand this transition to a non-fossil energy  society. In his introduction, the late Richard Douthwaite lays out a kind of road map by identifying nine ways in which fossil energy use has perverted our economies and lives:

1. It has transformed manufacturing methods by displacing human labor.
2. It has transformed agricultural methods, replacing human labor, animal power and sunlight.
3. It has enabled the world population to grow to a level that may well be unsupportable without its use.
4. It has devalued human labour and led to widespread unemployment.
5. It has made the economy reliant on economic growth to avoid collapse.
6. It has enabled extremes of wealth and poverty to develop.
7. It has led to the development of industrial capitalism.
8. It has produced profits that had to be recycles. This led to the growth of the banking system and debt-based money.
9. By fueling powered transport, it has destroyed self-reliant local economies and the nature of local relationships.

I find this approach extremely valuable. It moves away from blaming capitalism, rich people and banksters for the problems of contemporary society. By treating them as a natural outgrowth of fossil fuel dependence, Douthwaite inspires optimism that these “perversions” will be easy to undo once we cease to rely on oil, gas and coal to provide for our basic needs.

Layout of Fleeing Vesuvius

Fleeing Vesuvius is divided into seven parts:

Part 1 – looks at energy and water availability in a post-carbon world, with a detailed discussion of our diminished capacity to produce food.

Part 2 – looks at models for new non-debt based monetary systems that will greatly facilitate our transition to a fossil energy-free economy, as well as alternative, non-corporate methods for financing land and business development.

Part 3 – looks at alternative land management strategies that will improve energy efficiency by promoting the “proximity” of complementary enterprises (for example, building factories near each other that use each other’s waste products), and specific techniques that increase and maintain soil carbon and mineral content.

Part 4 – looks at a novel “Cap and Share” regulatory scheme to rapidly reduce corporate carbon emissions. It would cap the emissions each company (and country) are allowed, while sharing the cost of running the scheme among the entire population.

Part 5 – looks at the immense lifestyle changes we all need to make to survive in a post-carbon world and how the Transition and similar movements are helping communities prepare themselves to make these changes.

Part 6 – looks at specific approaches for breaking through widespread apathy and denial about the imminence of economic and ecological collapse.

Part 7 – is a collection of specific suggestions of what people can do on the individual, community, national and international level.

The final section of the New Zealand edition contains a number a brief essays of the Transition and other sustainability initiatives currently being undertaken in this country.

Part I – “Energy Availability”

I have already discussed the connections made in Part I (i.e. capitalism ends when the oil runs out) in my last blog. However I want to share graphs that summarize the points made about EROI (Energy Return on Investment, aka EROEI Energy Returned on Energy Investment). Although there’s still a lot of oil, gas and coal in the ground, we have most likely passed the point where the “sweet” stuff, the reserves that are easy and cheap to extract, has been used up. Even more importantly, owing to low EROI, renewable energy sources will never replace fossil fuels. Thus we have no choice but to downsize our energy intensive lifestyles.

Illustration 2: An energy source can rarely be used directly. An energy extraction process is required to discover, extract and process the resource before its energy is available to society. This process consumes energy itself, a deduction from the energy otherwise available. The energy return on invested is the ratio of surplus energy to energy required to drive the process.

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Offshore wind and tidal barrages give good energy returns

llustration 1: The world does not need just energy – it needs energy that is delivered with very low levels of carbon dioxide emissions (that is, a low-carbon intensity) while still giving a lot more energy back than it took to produce it. This chart, by Evan Robinson, shows the most promising technologies and those to ignore. The half dots indicate where a technology is beyond the limits of the chart. Source: http://evanrobinson.typepad.com/ramblings/science_nature/

It took me awhile to figure this one out – there’s a lot going on here. You read EROI (or EROEI) from left to right. Energy sources with an EROI of zero (at the far left) use up as much energy in extraction/production as they release. Solar thermal and geothermal have a very low EROI, while tidal energy has an EROI even higher than 1970s oil reserves. The EROI of Middle East oil isn’t listed (Saudia Arabia, Iran, etc aren’t very transparent about their production costs). Different Peak Oil websites estimate that Middle East oil has an EROI of between 20 and 30. This gives it an EROI somewhere between 1970s and 2000s US oil (it costs a lot more to extract US oil now than 30 years ago because it’s harder to get at). This doesn’t include the cost of transporting oil to the US, cleaning up oil spills, the wars in Iraq, Afghanistan, Libya (Iran?), etc – costs that keep going up and up. The vertical axis is the carbon emissions produced by each energy source.

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The area of each bubble represents the energy return on energy invested — EROI. The most valuable energy resources are those with large bubbles – a high EROI – at the top of the chart because this shows that they also have a high Energy Internal Rate of Return – EIRR. In other words, they pay back the energy invested in developing them rather quickly. Photovoltaic, nuclear and hydropower have low rates of energy return. Graph compiled and redrawn specially for Feasta by Jamie Bull, oco-carbon.com

To be continued, with a discussion of Parts II-VII. No more graphs, I promise.

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